Nine of the 19 US monetary policymakers predict three quarter-point cuts, and another nine project two or less.
The United States Federal Reserve defined this Wednesday that it will maintain monetary policy rates in the range of 5.25% and 5.5%, as expected. But he also warned that he will not cut rates until he has “greater confidence” in which the inflation moves sustainably up to 2%. Despite this decision, the Fed officials still plan to cut interest rates 75 points three times this year. How does this measure impact the Argentine markets?
The measurements of the Federal Reserve are not harmless for the rest of the countries in the world, obviously including Argentina for its incidence on the cost of the dollar and the direction of capital flows. In this sense, the economist Gustavo Quintana pointed to Ambit that the measure turned out to be “less hawkish” than expected, in which the economist agreed Federico Glusteinwho explained that The market’s gaze will be on the potential lowering of rates that the US central bank foresees, since this measure could “help” financial investment.
In turn, the chief economist of Delphos Investments, Jorge Neyrohighlighted the positivity of the lowering of rates due to the favorable scenario it generates for a future “placement of debt that allows lifting the stocks and refinancing capital maturities with external bondholders”, as proposed by the president Javier Milei. In that context, “any lowering of international interest rates helps Argentina access the international market with better rates,” he said.
In that sense, Andrés Reschini, of F2 Financial Solutions, warned that if officials changed or delayed projected rate cuts, that would would negatively impact asset valuations, financing cost and particularly in the value of commodities that Argentina exports.
The chairman of the Federal Reserve, Jerome Powellsaid in a press conference that despite recent data, inflation figures “they haven’t really changed the overall story, which is that of an inflation that is gradually decreasing, on a somewhat bumpy path”, remaining at 2.6% (for measurement without food and fuel). Meanwhile, unemployment remained at 4%.
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Fed still expects three rate cuts this year: asset profile improves
The cut in rates Federal Reserve gives greater competitiveness to emerging markets and “it will improve the profile for stability”. Both the bonuses like the Actions and the dollar they become a more attractive haven of value. However, there is also the possibility that there are flows that could migrate to US assets “for performance and guarantee before the cuts,” Quintana said. She also highlighted that beyond the bullish streak that Argentine assets experienced in the last three months Driven by the expectations aroused by the economic program, the US central bank’s strategy will give greater impetus to bonds, stocks and the dollar.
In this way, by the end of the year, If Argentina continues to improve its macroeconomic profile, it could receive some potential investment -according to Glustein- venture fund flows, which would increase the availability of dollars in our country. In this context, “it is important that the trajectory of the dollar be maintained without high appreciation to avoid strong declines when that happens,” highlighted the economist.
The fact that the Fed will not take a more restrictive stance regarding its monetary policy from now on is good news for investors. credit quality bonds in dollarssince possible cuts in the interest rate can lead to improvements in prices, the report highlighted PUENTE Investment Advsory.
However, he recommended correctly consider the duration of the bondssince all terms can benefit from these movements.
Source: Ambito
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